Judge dismisses JBG's convention hotel lawsuit

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Sarah Krouse

Staff Reporter

A D.C. judge late Monday dismissed The JBG Cos.'s lawsuit over the proposed convention center hotel, the first major court decision in what has become a tangle of lawsuits and countersuits over the $537 million hotel.

The dismissal was somewhat unexpected, as D.C. Attorney General Peter Nickles put out an announcement Monday morning saying all the parties involved in the suits had requested a 21-day stay while they worked out a settlement.

The late 40-page ruling from D.C. Superior Court Judge Natalia Combs Greene granted a motion for partial summary judgment and a motion to dismiss, both of which were filed by Marriott International Inc. Although the Bethesda hotel giant was not named in JBG's original lawsuit, it petitioned the court to join the suit as a defendant along with the city and later countersued JBG.

The motion for summary judgment indicates the judge felt Marriott's arguments were likely to stand if the case went to trial. Combs Greene had twice previously rejected motions by the city to dismiss the case outright.

All parties will attend a status hearing April 23, and it's not clear whether JBG will appeal the dismissal. Neither JBG officials nor attorneys for Marriott could immediately be reached for comment.

Several lawsuits related to the matter remain pending as well. The Washington Convention and Sports Authority and the District have counter claims against the JBG entity, claiming economic interference.

JBG filed its original suit Sept. 4 through an entity called Wardman Investor LLC, crying foul on the team selection process — calling it “invalid sole source procurement” — and asking a judge to delay construction of the 1,167-room Marriott Marquis hotel. It had lost its case before the city's Contract Appeals Board, a decision it also appealed and lost in court before a different judge.

Combs Greene rejected JBG's argument that the D.C. Council did not have the authority to exempt the procurement of the convention hotel from the city's Procurement Practices Act.

If the council has the authority to enact procurement laws, she wrote, then it "has authority to exempt, amend or repeal those laws as it sees fit."

Before the ruling was issued, it appeared the multiple disputes would be resolved in a matter of weeks, with Nickles' announcement that the parties were in settlement talks and were seeking a stay in the litigation.

He said Councilman Jack Evans, D-Ward 2, had been meeting with the parties for several weeks.

“Jack Evans and I interceded and used our good offices to show the parties the light, and that we wouldn’t put more money in it and that they’d be putting in money endlessly. We made it clear that this either resolves itself or we have other options. There’s no way we’d let the hotel flounder,” Nickles said before the judge's dismissal.

The hotel has been on the drawing board for at least a decade. The city issued the original RFP in 2001, selecting Marriott and RLJ Development, the hotel company headed by BET co-founder Robert Johnson, to build the hotel. But negotiations over the hotel's location and size hobbled the project, and it wasn't until 2006 that the D.C. Council settled on the site and public financing.

Even then, delays again hindered the hotel's groundbreaking. With new partners Quadrangle Development, ING and Capstone, Marriott went back to the city seeking more public financing, claiming they could not close a gap in their financing because of the recession and the freeze in the capital markets. The city approved an improved deal with Marriott in July; the city is now set to contribute $272 million in public financing for the hotel and grant the development team a 99-year ground lease on city-owned land.

JBG's lawsuit puzzled many in the industry, because JBG had not bid on the initial RFP. That led to widespread speculation that JBG was upset with Marriott over its attempt to build condominiums at the Marriott Wardman Park, which it owns and operates under the Marriott flag. JBG declined to comment on the speculation at the time.

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